Like others in Australia’s fledgling submarine fleet, the Odin class Oxley and her sister boat Otway were constructed at Vickers Armstrong Ltd, Barrow-in-Furness, England.

Oxley and Otway were slightly modified versions of the O-class of which nine were built during the 1920s. HMAS Oxley was commissioned on 1 April 1927 under Commander Hugh R Marrack, DSC, RN and HMAS Otway was commissioned on 15 June 1927 under Lieutenant Commander George JD Tweedy, RN.

The first post-World War I class of submarines designed and built for the Royal Navy, the Odin Class each included six torpedoes at the bow, with a further two located in stern tubes.

Oxley was named after the famous Australian explorer Lieutenant John Oxley who had served in the Royal Navy during the 19th century. On completion Oxley was temporarily attached to the Royal Navy 5th Submarine Flotilla before departing Portsmouth in company with Otway on 8 February 1928.

These boats were theoretically able to dive to 500 feet (150 m), though none were formally tested beyond 300 feet (91 m).

Ordered under the RAN's 1924-29 development program, their delivery to Australia was the longest unescorted ocean passage undertaken by British submarines up to that time. The entire voyage was completed on the surface and the new vessels encountered heavy weather which damaged their engine columns. Both submarines remained in Malta for several months while repairs were made and Lieutenant Commander Frank Getting (Lieutenant Getting was promoted to Lieutenant Commander on 15 April 1928), RAN was appointed ‘In Command’ of HMAS Oxley on 5 September 1928.